A400M contract renegotiation ‘slower than expected’

Gareth Jennings, London - Jane's Defence Weekly

31 October 2018

With 69 of 174 A400Ms so far delivered, Airbus' efforts to renegotiate its delivery and capability rollout contract with OCCAR and the partner nations is taking longer than expected. Source: IHS Markit/Gareth Jennings

Airbus’ efforts to renegotiate the delivery schedule and timeline for the further rollout of the military capabilities of the A400M transport aircraft are taking longer than expected as the company focuses on commercial production and deliveries.

As noted in its ‘nine-month financial results for 2018’ statement, Airbus is progressing with the objective it set itself in February as part of the declaration of intent (DOI) framework, which was agreed with the European Defence Agency OCCAR and the partner nations, “but progress to convert the DOI into a contract amendment is a bit slower than planned”.

“We are progressing with the military capabilities, deliveries, and retrofit [of the A400M]. The contract amendment discussions are advancing, but a bit slower than planned,” Airbus CEO Tom Enders said on 31 October, adding “Our primary operational focus remains on commercial aircraft deliveries and securing the A320neo [airliner] ramp-up.”

In February Airbus announced that it had signed a DOI with OCCAR and the partner nations of Belgium, France, Germany, Luxemburg, Spain, Turkey, and the UK to renegotiate the delivery schedule and timeline for the further rollout of the military capabilities of the A400M. Under the DOI, the parties have agreed to work on several contractual elements including a revamped delivery plan as well as a roadmap for the further development and completion of military capabilities for the aircraft.

Airbus said at the time that the DOI was essentially a re-baselining geared at mitigating risks and to ensure the future of the programme. With the effort taking longer than expected, Airbus noted in its financial results statement that, “Risks remain, in particular [with] the development of technical capabilities, securing sufficient exports on time, on aircraft operational reliability in particular with regard to engines, and on cost reductions as per the revised baseline.” The company did not say when it expects the renegotiation to be completed.

Want to read more? For analysis on this article and access to all our insight content, please enquire about our subscription options atihsmarkit.com/janes

FEATURED REPORT

With many of the vital civil and military systems becoming ever more reliant on satellite technology, the UK is reorganising and reinvesting in the space domain. Gareth Jennings explores the UK’s renewed focus on space as it attempts to safeguard its terrestrial interests